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Special Renovations Issue – Critical Systems

Special Renovations Issue – Keep your energy costs in check by choosing the right equipment.

Your Building from the Inside Out

Rehabbing a multifamily property frequently includes deciding whether or not to replace the HVAC equipment–and with what. It's a big decision, and one that has become more difficult lately, thanks to evolving technologies and volatile energy prices.

To simplify the process, you may want to consider developing your own guidelines for HVAC work if you do a fair number of rehabs and renovations. That's what Southern California Housing Development Corp., a nonprofit in Rancho Cucamonga, Calif., that owns and manages 4,500 apartments, does. Since its 1992 founding, SoCal Housing has bought and rehabbed about 30 garden-style apartment buildings and follows a policy of replacing older systems, even if they appear to be working properly. "We replace any system that's 15 to 20 years old, with 20 being the absolute maximum," says James Aliberti, senior director of property management. "It can be costly, but we have to consider the cost of repairs down the road."

Probable repairs are just one variable on Andy Padian's list. Padian, head of the multifamily program for architectural and engineering firm Steven Winter Associates, advises New York building owners on whether to upgrade their HVAC systems. "If repair bills are at least 10 percent of replacement cost and the fuel usage is going up, you should consider replacing the old system," he advises, but there are caveats. "You may find that an overhaul will keep it running 10 more years," Padian says. "If the building has a steam system, for example, you won't get greater efficiency with a new system, so you need to enter that into the equation."

Hot and Cold Choices

HVAC systems are getting increasingly complex, in part because they need to meet new efficiency standards. This complexity means they require more skill to maintain, as any onsite staffer will discover with a new system, especially if the property's heating and cooling haven't been upgraded in a while. To avoid having to call the HVAC company every time there's a maintenance issue, Aliberti recently launched a formalized training program for SoCal Housing resident service managers. "They're schooled in regular maintenance, which involves a lot more now than it used to," he says.

Installation expectations are changing, too. Padian warns multifamily owners to be wary of engineers who base their recommendation for a new system on old energy use assumptions or who simply recommend replacing an existing system with a nearly identical one. Over time, improvements such as new windows, better insulation, and other energy-friendly upgrades may have lowered the building's heating load, making a new system that's sized the same as the current one more expensive and more fuel-hungry than necessary. Padian also says to question any extra safety factors beyond those recommended by the manufacturer.

"I often see systems sized at twice what they need to be. That's excessive," he says. "I've literally seen one system that was four times bigger than necessary. That's not covering your butt. That's being foolish." He advises owners to require the engineer to perform a heating and cooling load calculation for the building prior to selecting a new HVAC system.

In properties with aging decentralized cooling equipment in need of replacement, new rules may demand that owners purchase more efficient equipment. In January, federal regulations began requiring new cooling equipment to have a seasonal energy efficiency rating (SEER) of 13, up from a previous minimum of 10. In some buildings, this can create installation challenges. According to Larry Spielvogel, a King of Prussia, Pa.-based engineer who advises multifamily owners on HVAC issues, replacement units may be 25 percent to 30 percent larger. "I live in a high-rise myself," says Spielvogel. "It has split-system air conditioners with outdoor units on balconies and indoor units above the laundry area. The indoor units are already squeezed in. If management has to replace them, the room might need to be reconfigured to make them fit."

Volatile energy prices are also leading engineers to rethink what is and isn't cost-effective. In submetered properties, Spielvogel advises owners to consider replacing gas furnaces with air-source heat pumps, even in northern climates. In the Philadelphia area, for instance, he says that heat pumps start to be cost-effective when heating oil hits prices of $1 per gallon or more. (As of mid-February, oil prices were in the $1.80 to $1.90 range.)

Heat pumps do need backup electric resistance heat, though, for residents to use when temperatures get too cold for the unit to fully heat the space. Such an addition might require a major electrical system upgrade at a property.

Waste Not, Want Not?

One technology whose cost-effectiveness has become less clear is combined heat and power, or CHP. This system consists of a gas- or oil-powered electrical generator whose waste heat is used for hot water, space heating, and other uses.

Most CHP generators burn natural gas, so they made clear economic sense when gas prices were low compared to electricity. But what about today, when the cost of gas is soaring?

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Fred Newman, executive director of the Winchester, Conn., Housing Authority, has grappled unsuccessfully with that question. In 1996, a CHP was installed to help power half of the 180 units in the authority's four-story Chestnut Grove apartment building. "Energy savings were wonderful because the price of gas was in the basement," Newman recalls. But two gas price surges over the last decade have made him change his mind twice on whether to expand the system to the rest of the facility.

Although gas has now stabilized while electricity rates are taking a hike, he has decided to watch and wait for a while. "It's a more difficult decision than it was 10 years ago because of the volatility of the energy markets," Newman concludes.

These CHP systems are more likely to earn their keep when they are used in properties where the waste heat can be used all year. Case in point: the Trent Center in Trenton, N.J., a senior housing complex that consists of two 220-unit high-rise buildings. According to Lionel Kier, executive director of BTC Management, which manages both buildings, one has a Carrier absorption chiller that uses waste heat to drive the cooling system, while the other has an electric centrifugal chiller. Because the absorption chiller requires heat to run, there's more opportunity to use waste heat from the CHP system, making the system more efficient and economical.

The task of calculating the costs and benefits of combined heat and power systems may soon get simpler. Steven Winter Associates is working with the state of New York to create a CHP screening tool for multifamily building. Questions will cover energy prices, building size, the opportunity to use waste heat, the metering configuration (submetered buildings tend to be poor candidates), and system size (you don't want a CHP system so small that it doesn't generate meaningful power or so large that it sits idle for long periods).

The tool will calculate CHP's cost-effectiveness on whether the system can pay for itself in five to seven years, but Dominique Lempereur, a senior engineer at Steven Winter Associates, hints that such systems might be more appropriate for owners with a longer view. "If you're looking at a 10-year rather than a five-year payback period, you may make a different decision."

Given today's roller-coaster energy ride, that might be good general advice for any HVAC upgrade.